People use crypto-backed loans for the same reason they borrow against their stock portfolios: to reap the benefits of rising prices without diminishing the size of their bets. Ether, for example, has risen nearly 10-fold in the past year, eclipsing the interest on the average ether-backed loan. Borrowers can also use this strategy to avoid capital-gains taxes.
Antoni Trenchev, co-founder and managing partner at the crypto lender Nexo Capital Inc., said, “The idea is to shift some of your digital assets into real-world profits so you can’t lose them.”